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Refutation of the “Republican Revolution” – Part 5

Okay this is actually true; Germany did experience hyperinflation in the 1920s. However, the reason it is on the Republican Revolution page is because conservatives are under the impression that America is experiencing inflation due to the increased government spending. That just isn’t true – take a look.

One more note – Germany experienced hyperinflation because they were forced to print more money to pay back reparations from World War I. Conservative’s favorite economist, John Maynard Keynes, warned Europe not too impose such harsh measures precisely to avoid hyperinflation. One Smart Guy.

5 thoughts on “Refutation of the “Republican Revolution” – Part 5”

It amazes me that you speak in such a short sight time horizon and think everyone else has the same time horizon in mind. Ok so fast forward to when China calls in our debt. How will we pay it back? Will be print more money. Sound familiar?

It amazes me how all this Keynesian theory doesn’t example what happens in the long term when we owe all this money to hostile foreign government. It might feel good in the short term to spend, spend, spend and it might get votes but at some point you have to pay the government mortgage.

The economic situation we are in will naturally keep inflation low. The only way inflation will take over is if the Fed continues its policies once the economy has returned to full employment. At that point though the the Fed will engage in contractionary monetary policy to prevent inflation.

I assume you bring up China more in reference to the national debt. That is a separate issue. The point of the post was to show that conservatives who fear we are headed for hyperinflation are misguided in their understanding of the economy.

The Fed will contract its monetary policy if we ever get the economy moving again – agreed.

However, based on Keynesian theory we need to keep spending to get the economy moving. So when our debt gets to $20 Trillion, like it is projected to do during Obama’s second Keynasian term, the Fed will have to print more money to pay China when they finally call in our debt. Just like Germany had to print money to pay post WWII reparations.

The problem in Germany in the 1920s is not the same as America and China now. First, money back then was tied to the gold standard which is much more difficult to control, which paved the way for hyperinflation. Also, Europe forced those reparations on Germany to hurt them. China wouldn’t gain from trying to hurt us. They would just see their investment go down toilet. So your comparison doesn’t hold and the poster is misguided.